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Despite Economic Headwinds, Strong Demand to Keep TSM Stock Blazing

Story Highlights

Interestingly, the company does not see the U.S. inflation rate having a significant impact on the semiconductor chip manufacturing industry.

According to a report published by The Wall Street Journal, Taiwan Semiconductor Manufacturing Co. Ltd. (NYSE: TSM) expects 2022 revenue to witness strong growth on the back of solid demand for its chips. This is despite economic headwinds in China and the U.S., two of its biggest markets.

The company expects to record revenue growth of around 30% this year against 24.9% last year. This is higher than the 20% growth projection for the overall wafer fabrication industry, the chip maker said.

TSM’s Chairman Mark Liu does not expect the U.S. inflation rate of over 8% to have a significant impact on the semiconductor chip manufacturing industry. He anticipates the company’s production plants to run at full capacity in 2022, riding on strong demand for computers and EV-related products.

C.C. Wei, the CEO of TSM, said, “Chips using advanced or specialized technologies are the major drivers of the company’s growth.”

Meanwhile, the Hsinchu-based company plans capital expenditure of $40 billion to $44 billion this year and over $40 billion in 2023. At present, it is constructing new plants in Japan’s Kumamoto prefecture and Arizona.

TSM designs and produces semiconductor chips for consumer electronics, Internet of Things (IoT), automotive and high-performance computing industries.

Stock Rating

Based on one Buy and two Holds, the stock has a Moderate Buy consensus rating. TSM’s average price target of $112.50 implies 20.4% upside potential from current levels.

Hedge Funds’ Activity 

TipRanks’ Hedge Fund Trading Activity tool shows that the confidence in TSM is currently Very Positive. The cumulative change in holdings across all 27 hedge funds that were active in the last quarter was an increase of 7.8 million shares.

Bloggers’ Stance

TipRanks data shows that financial bloggers are 84% Bullish on TSM, compared to the sector average of 65%.

Conclusion

Even though TSM stock has lost 21.2% over the last six months and 19.1% over the past year, the company’s strong fundaments and high-profile client base, including Apple (NASDAQ: AAPL) and Sony (NYSE: SONY), stand it in good stead.

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